Intercept Pharmaceuticals, Inc.
Q3 2016 Earnings Call Transcript

Published: 3 Nov 2016

[Operator:]

Thank you for joining the Intercept Pharmaceuticals Third Quarter Results Conference Call. At this time, all participants are in a listen-only mode. Following opening remarks, Intercept management will open the lines for a question-and-answer period. Please be advised that this call is being recorded at the company's request and a webcast of this call will be archived on the company’s website for two weeks from today’s date. At this time, I would like to introduce Dr. Mark Vignola, Intercept’s Director of Investor Relations. Please go ahead.

[Mark Vignola:]

[Audio Gap] …years and while we have a strong interest from both physicians and patients, it will take time to educate the market about the risk of the patients with elevated outline phosphatase levels despite UDCA treatment. This will require a continued dedicated effort and Richard will shortly provide you with more details on the progress we are making. Moving now to our NASH program, where our Phase III trial REGENERATE remains a top priority for the company. As a reminder, REGENERATE is a large complex trial involving serial liver biopsies. We continue to strive for the completion of enrollment of our interim analysis cohort within the first half of 2017. However, in order to achieve this guidance, we need to continue to increase our enrollment rate. With this goal in mind, we have been implementing a number of operational initiatives and are also evaluating several available options to maintain our timelines. With respect to control, we are happy to announce today that we have completed our target enrollment of more than 80 NASH patients with fibrosis and we will shortly reclosing our patient randomization. As a reminder, this trial was a 16 week placebo controlled trial evaluating three doses of OCA 5 milligrams, 10 milligrams and 25 milligrams. The trial is prospectively evaluating the impact of statin therapy added to OCA on LDL and the effect of OCA on lipid metabolism. Across our other programs, we are also making good progress. As I mentioned earlier, we completing enrollment in our Phase II AESOP trial of OCA and PSC in September of this year. As a reminder, AESOP is a 24-week placebo controlled trial evaluating two titrated doses of OCA. 1.5 milligrams to 3 milligrams and 5 milligrams to 10 milligrams titration occurring filtration occurring at 12 weeks. The primary endpoint is to evaluate change in our [indiscernible]. This trial is the first clinical experience we will have with those CA and PSC. A devastating disease with no approved treatment options and a more complicated course compared to PBC. Finally, we are just a little over a week out from the AASLD meeting the key U.S. medical meeting in liver disease. For us, this year AASLD will be the first as a commercial stage company, where we will be able to talk about Ocaliva and present our new branded materials. We expect a key highlights of the meeting to be new data from the Phase III POISE trial, which will provide more information on those OCAs treatment effect benefits on liver stiffness as evaluated by trends in Transient Elastography by non-invasive means of measuring liver fibroses. We believe these data as through Ocaliva’s profile beyond its published effect on biomarkers alone and we expect this will generate interest to the medical community. With that, I would now like to turn the call over to Richard to provide you with an update on the U.S. launch.

[Richard Kim:]

Good morning, as Mark mentioned, we achieved net Ocaliva sales for the third quarter of $4.7 million. The third quarter represents the first full quarter of our marketing and sales efforts. And while we are still early in the launch we are encouraged that our experiences Thus far are supportive of a solid opportunity in the PBC market. I would like to provide you an update on what we've seen in this field. Our territory business managers have now seen more than 90% of our target physicians and overall the position feedback Ocaliva on a caliber has been very positive. HCPs are excited about the first therapeutics option to PBC patient in nearly 20 years. As we have previously mentioned given the slowly progressive nature of PBC changing behavior will continue to take time. Enrollments into our patients services hub interconnect had been robust. And verify our fundamental assumptions about the PBC in market opportunity. Let me provide you a little more detail on the patients we're seeing. Consistent with our call in August, majority of the patient enrolled in interconnect are in line with our Phase III POISE population. Nearly all patients are initiating Ocaliva on the 5 milligram dose. While it is too early in launch to discuss compliance for persistency, our Phase III data showed optimal tolerability when starting with a 5mg dose. We know that reimbursement is a key area of interest. We are happy to report that we have made a good progress with payers. We now have more than 145 million lives covered with the bulk of coverage added in the fall. Coverage is generally consistent with our label. We are pleased with the success we have had with the payers and how Ocaliva has been moving to full formulated coverage. That said, we believe that this transition has contributed to a fighting flattening of IMS new prescriptions over the past several weeks. Our primary driver of this is the shift of Ocaliva from a medical exception process to full formulated coverage which has lead to a temporary slowing of a conversion of a enrolled patients into patients receiving shipped product. But as I mentioned earlier, we are very encouraged by the initial enrollment through Interconnect. We believe that the coverage process will improve overtime as published higher authorization criteria become available. Another quick note on IMS, we continue to view IMS as directionally accurate and a good tool to monitor performance. However, we expect that NRX will be a less reliable metrics of neutral demand going forward in the launch as prescription from titration will show up in the system as NRX. As more patients hit the three month mark, this [Indiscernible] represents an increasing portion of NRX. As we look forward, we believe we have a number of doctors supporting increased momentum for Ocaliva in U.S. First, our Ocaliva marketing brand campaign, which recently approved by the FDA’s OPDP division. As you are aware, through the majority of September, we are promoting predominantly of the product administered. We now have a brand new marketing campaign that has resonated with all customers. The official tools and messages will augment by territory business managers ability to educate physicians on the unmet needs in PBC. Additionally, we are executing our updated speaker of programs with our new branded messages. Secondly, we have just begun to attend medical conferences as a commercial entity. These are important venues for us to interact with our target healthcare providers. Early in October, we attended the American College of Gastroenterology conference. Next week, as Mark mentioned we are attending the AASLD meeting where we expect to engage a broad cross section of hepatologists community. Next as mentioned during the third quarter, our Phase III POISE trial was published in the New England Journal of Medicine. This publication is an important milestone for Ocaliva launch. As it is an essential factor in accessing many large academic institutions who require a peer review publication for treatment protocol decisions. Finally, we expect additional coverage decisions into the end of the year. And as these decisions become formalize at more payers, we expect the time from prescription, to product shipment to contract. To summarize, we remain engaged in our goal of Ocaliva to many PBC patients in need in the U.S. We have made excellent progress today, but we will continued to work hard as our job very just begun. Thanks. And now I would like to turn the call over to Lisa.

[Lisa Bright:]

Thanks, Richard. We are making great progress towards launching Ocaliva outside the U.S. and I’m excited to provide you an update. First, I would like to highlight the great news that the CHMP recently recommended granting a conditional marketing authorization for Ocaliva in the EU. We continue to plan for marketing authorization by the end of the year. This is a tremendous development, not just for our international effort, but also for patient with PBC in the EU. This announcement brings us one step closer to bringing these patients a first new therapy in really 20 years, In September, we announced that we had filed a new drug submission to Health Canada for marketing approval of Ocaliva for the treatment of patient with PBC. The submission was granted review. I would like to thank the physicians and patients who participated in our clinical program and our regulatory team, which has resulted in these positive outcome. Having just returned from UEG, Europe’s largest gastroenterology meeting, it’s clear that there is a high interest in cholestatic liver diseases. Our medical team has now made over 2000 contact with the key PBC physician and held over 25 advisory board and have helped us develop a good understanding of PBC management in Europe and Canada. We continued to make great progress in preparing for the anticipated launch. We have started recruitments of our sales force in early launch countries in addition to our medical and access team who have been working closely together now over the last 18 months. We plan to be able to reach 9o% of hepatologists and greater than 20% of gastroenterologists or approximately 7,000 physicians which between care for at least 90% of PBC patients in the major European countries. Good progress continues to be made preparing for reimbursement at a local country level predominantly focused on demonstrating cost effectiveness and budget impact. We are reiterating our previous guidance that we do not expect international revenues until 2017, we expect initial sales in early access countries, primarily Germany and France and to a lesser extent Canada and UK. Final pricing of reimbursement, a small number of patients with no other treatment options may be able to access Ocaliva through an early access program. In France for example, we are in the process of an ATU up in running working with a French Regulatory Agency highlighting the significant unmet need in PBC. Several patients in Switzerland, Austria and Denmark have also been granted access under their own local regulation. With that, I would like to turn the call over to Sandip.

[Sandip Kapadia:]

Thank you, Lisa, and good morning, everyone. Please refer to our press release issued earlier today for a summary of financial results for the quarter ended September 30, 2016. I would like to take this opportunity to give you a brief overview of three key areas. Our third quarter results, our cash position and provide financial guidance for the balance of the year. So let me get started with the third quarter of 2016 results. We recognized Ocaliva net sales for the quarter of $4.7 million, which reflects our estimated filled prescription. Please note that until we establish a history of sell-through, we will be booking Ocaliva sales based on this method. For the quarter, gross to net fell in the 10% to 15% range, we expect December to be relatively consistent in the fourth quarter. As we enter 2017, we expect gross to net to be slightly higher. Cost to goods was de minimus for the quarter as the cost related to manufacturing was expensed prior to FDA approval of Ocaliva. The company expects cost to goods to remain negligible until previously expensed supplied for OCA are sold. So let me move on to our cash position. We ended the quarter with $780 million of cash and cash equivalents and investable securities on our balance sheet. As a reminder, this includes approximately $409 million net proceeds from July 2016 convertible notes transaction. The $409 million proceeds are net of underwriting fees operating expenses and funding for the cap call transaction. In connection with the convertible transaction, we recognized $7.1 million of net interest expense in the quarter. And finally, financial guidance. For the full-year of 2016, we are revising our adjusted operating expense guidance to $320 million to $340 million as a result of lower than expected clinical trial and delayed timing in raw material or OCA R&D manufacturing. We do expect an uptick in operating expense in the fourth quarter, but not as high as we had previously expected given the cost of our delays into 2017. We would like to reiterate that we do not expect ex-U.S. Ocaliva sales until 2017 and this will be on a country-by-country basis as we pertain pricing and reimbursement. Finally, as a reminder, adjusted operating expense is a non-GAAP financial measure, we anticipate that other than the net $45 million charge or the shareholder litigation stock based compensation expense will represent the most significant non-cash items that is excluded in adjusted operating expense as we compared to operating expenses under GAAP. Please refer to our press release from earlier today for a reconciliation of our historical non-GAAP adjusted operating expense to GAAP operating expense. With that I would like to turn it over to the operator for some questions. Operator.

[Mark Vignola:]

Hi, this is Mark Vignola speaking. We remain aware of some audio issues during the call, we just want to make you aware that we have slide attached to the webcast today that are available both on the webcast and our website and these include our forward-looking statements. We are now ready to take your questions. Operator?

[Operator:]

[Operator Instruction] Our first question comes from the line of Michael Yee with RBC Capital Markets. Your line is open.

[Michael Yee:]

Hey guys thanks. Good morning. Two questions one is maybe you could expand a bit on your commentary around some of the change over as you move to formulary access. And how that impacts I guess the cadence of sales for Q4. How should we think about Q4 flattish, higher, how should we think about that. And then for NASH, you made some comments about showing enrollments rates, are you implying accelerating rates, are you implying maintaining those rates. And how do you think about the confidence for maybe first half of 2017 enrollments timeline? Thanks so much.

[Richard Kim:]

Yes hey Michael its Richard Kim, I will take your first question and pass the second one to Mark. So, as far as coverage is concerned, so we are really pleased with the fact that at this point we really have 145 million lives covered in the US. I think what has gone on right now is remember these physicians previously were dealing with generic first and now they are dealing with the start off process with a branded specialty product. So, we think there is a bit of learning and adjustment period here, I think for Q4 it’s still going to be going on to certain extent. But over time, I think it will work, having the coverage will be a very positive thing for us. I think this is a temporary situation that will just take some time. So Q4 also has the complication of holidays and things coming into the mix as well, but we are really pleased with our coverage so far and we think that for the long run this will really help expedite patients getting on to Ocaliva.

[Rachel McMinn:]

And Mike its Rachel, just because it sounded like you were asking for guiding first for 4Q. we are obviously not proving revenue guidance at this time, but as we have said in the past, we do believe that IMS even though it’s not perfect is directionally accurate. So you should be able to use that as a guide to generate your estimates.

[Michael Yee:]

Okay.

[Mark Pruzanski:]

Good morning. Yes so Mike as you know this is the first NASH Phase III outcomes trial that any company has conducted it, it’s obviously a major undertaking given the size complexity of the need for serial biopsy. It’s clearly a huge priority for us and we are working very hard to enroll it as expeditiously as possible. We would have hoped to have seen a bit more of an uptick in enrollment at this point, and have recently done a deep dive to identify opportunities to further improve an enrollment which we have already started implementing. Il will just give you an example maybe obvious, but just given the strong interest from investigators who continue to approach us some around the world who have NASH patients in their clinics. We decided to increase the number of sites to around 250 from the original stated goals of a target 300 sites. And obviously that did help drive enrollment further. I mean and the two question enrollment rate, I mean as you know in any large study towards the end of the study, you see a clear upward popping curve as enrollment accelerates and we would expect to see the same with REGENERATE and frankly we are just looking for an increased slope of the curve.

[Michael Yee:]

Okay. Thank you.

[Operator:]

Thank you. And our next question is from the line of Alicia Young with Credit Suisse. Your line is open.

[Alicia Young:]

Hi, guys. Can you hear me?

[Lisa Bright:]

Yes.

[Richard Kim:]

Yes.

[Alicia Young:]

Okay. Cool. Thanks for taking the questions. I guess one more on maybe like patient behavior and around people coming back for treatment with the Ocaliva launch. I mean are you getting the sense that kind of patients are mobilized and kind of come again just a matter of maybe kind of the reimbursement is that process being slow? And then I have one more question.

[Richard Kim:]

Sure. Thanks Alicia its Richard. So yes, as far as the patients are concerned and our physician, the feedback has been very positive, the new enrollments into our Interconnect patient service has been robust. And I think right now as mentioned earlier, I think we are in a sort of temporary state as we are sort of going from medical accept review to actually prior authorization review. So some of the patients are getting caught up a bit, but we do believe that this is really a temporary situation.

[Alicia Young:]

All right. And then on IMS, do you think that it will correct itself going forward, will you be able to work with IMS and kind of better inform, I mean I heard some of the answer, but it sounds like the titration of those is what is causing a little bit of discrepancy is that correct?

[Richard Kim:]

Yes, the IMS data we absolutely believe its directionally correct. I think on a weekly basis there probably a little bit more error week-to-week, but I do think going forward now with NRX is it will be compounded by patients titrating from 5 milligram to 10 milligrams, we are sort of starting entering that phase where more of the patients should be experiencing that. So I think you are going to have to start to look at some of the differential dosing utilization there as well, but IMS, I think will stay directionally correct for a lot of new data.

[Alicia Young:]

Is [Neutor Brand] (Ph) better than NRX?

[Richard Kim:]

Yes Neutor Brand is usually a better surrogate as you know for NRX, if you switch a dose that can be listed as an NRX but Neutor Brand is usually better surrogate for new patients. That’s correct.

[Alicia Young:]

Okay.

[Operator:]

Thank you. Our next question comes from the line of Ritu Baral, Cowen & Company. Your line is open.

[Ritu Baral:]

Hi guys. Thanks for taking the question. So CONTROL is now enrolled. What constitute success when we see the data. How should we be looking at - what sort of data will you produce top line and how should we think about that?

[Richard Kim:]

Yes, thanks for the question Ritu. So as you remember, we did post-op analysis with the investigators and we demonstrated that patients who had seen an LDL increase and had a statin outage reverse their LDL increase to below baseline levels, no difference from placebo. So the statin is what it was expected to do. And CONTROL is a prospective study to reproduce this finding and demonstrate that the statins, which are indicated in NASH patients with elevated LDL can safely be added to OCA and control LDL effectively. So that’s the primary goal. Another goal is to further explore the listed metabolic effects of OCA. So looking at both cholesterol and triglycerides.

[Ritu Baral:]

Should we expect to have subtraction data, lipid subtraction data on top line and is there any sort of margin as far as retrieving LDLs at baseline or around baseline?

[Richard Kim:]

I can’t specify exactly what we are going to put out top line, but we are going to be looking at subtractions. And we will be looking to report the data out at an appropriate scientific meeting once available.

[Ritu Baral:]

Got it. And then my next question is on the Ocaliva launch, you mentioned that moving from medical exception to formal published prior off requirements maybe willing some of the prescription. Can you walk through the mechanics of why that would be and also what is insight right now for prior off. And how do you expect that to change, what might the range of prior off requirements be say six months from now?

[Richard Kim:]

So, it’s a great question. So I think as far as some of the mechanics are concerned, sort of envision a patient going to medical exception and it’s a lot of manual work, but what happens often times is when the prior authorization criteria is published, there are different fields of data that are required. So what happens then, is it is being kicked back to either specialty pharmacy or to the office to updated data. And unfortunately it’s a temporary position right now where its slowing down the process. As we think about the criteria right now, we would say what we are seeing generally is its very well align to the label. There are different nuances from different payers, but we are generally very well aligned to label thus far. So I think over time, I think that’s why we have a perfect medical managed market team that’s out there. But I think over time, we will continue to see a lot of the coverage ne consistent with what we have in our label.

[Ritu Baral:]

What is like the most restrictive and what is the most [indiscernible] that you are seeing right now as far as prior off?

[Richard Kim:]

Generally the criteria is pretty good. There are some clients that have alk phos levels 1.67 and there are some clients that just stay at elevated alk phos. So there is still quite a bit of a range. So, it’s really hard to say there is a specific height that’s going on. So I think it’s typical of a lot of product launches where different payers will react differently. But I think the most restrictive we have seen is a alk phos of at least 1.67 which was well within our expectation.

[Ritu Baral:]

Got it. Thanks for taking all the questions.

[Richard Kim:]

No problem. Thank you.

[Operator:]

Thank you. Our next question comes from the line of Ying Huang with Bank of America Merrill Lynch. Your line is open.

[Ying Huang:]

Hi. Good morning. Thanks for taking my questions. Can I ask before what you have observed in your loss of share about the compliance and also persistence of Ocaliva in PBC patient so far. And then, secondly, with the most recent Gilead announcement on their NASH program. I was wondering if you can comment on what they have seen in the Phase I/II studies. And also whether do you expect any new competition from enrollment on your REGENERATE trial. And lastly, what can we talk about the difference between U.S. market and the EU market on the PBC in terms of what expectation for the launch and the dynamics increase in the landscape. Thank you.

[Rachel McMinn:]

Okay. So, thanks Ying for all those questions. So, we have got a bunch of questions. So, we are going to start with Richard on compliance on persistency and then Mark will talk about the Gilead, the competitive landscape. And then we will have Lisa come in and talk about her perspective into the international versus US. So, Richard.

[Richard Kim:]

Hey Ying, thanks for the question. So as far as the compliance and persistency is concern, I think it’s a little too early still to make any definite statements on this. What I can say anecdotally is, I was at the American College Gastroenterology Meeting just few weeks ago and that was a lot of customers. And we are not hearing any massive issues as far as producer things. It’s going to be happen, but we have not heard anything out of the ordinary. So right now it’s a little early, we are still going to be going through the period for dose titration as well. But thus far, there has really been nothing that we refer to as unexpected, maybe Mark I can turn the next portion over to you.

[Mark Pruzanski:]

Yes, Ying thanks. So with respect to competitive landscape, I mean first one I would make is that our drug OCA remains the only one to have a very robust of Phase II well controlled data set behind it. That gives us the confidence that we had in designing and proceeding with the REGENERATE study, which is well matched to FLINT. You know no doubt the is a competitive environment has been heating up with recent announcements from other companies intending to proceed into Phase II. I would to say the Gilead has upon results that you asked about look interesting, but it was small data set, uncontrolled study, 72 patients. And from our perspective, given that it was only 24 weeks in a pre-sporadic population, it looked a little anomalous that you saw patients potentially advancing to sclerosis in such a short period of time. So, and then of course there is the announcement of simtuzumab not making it, in well controlled studies, and I for me for us this highlights just how difficult this is. The need for well controlled robust studies to really prove out that given drug has antfibrotic effects. And frankly, you are also seeing companies design studies or announce that they are going to be designing Phase II studies that cleave to the mechanism of action of the drug, be it an antifibrotic or an [indiscernible] type mechanism. And again just want to circle back to OCA, which remains the only drug out there to have shown the ability to hit all the key features, not just fibrosis, but clearly is the most important. But also key features of [Indiscernible]. In terms of you know the final point that you raised, which is potential competitive enrollment environment. clearly I mean right now we are generally unopposed out there, I mean there are some small Phase II studies, Gentech has its Phase III, but as I mentioned in my earlier comment, we are working to enroll REGENERATE as expeditiously as possible and keep ahead of the competition. And there are patients out there of course.

[Lisa Bright:]

Okay. And yes, thank you for the question. So I mean I think the patient care pathway and the management of PBC is essentially similar to that seen in the U.S. across the European countries. Of course, the patient numbers for PBC are similar to if not slightly higher than the U.S., but of course there are some fundamental differences to in particular, one is of course pricing and the other the timing of reimbursement. So we generally expect pricing in Europe to could be lower than the U.S., I mean we have generally said before in specialty medicines 40% to 50% and of course pricing in reimbursement timeframes are varying country specific and our against it. So clearly up take in those countries is very much dependent on the timing of processing and reimbursement. And as we said before, we would expect that 2017 international revenues are mostly going to come from the early access countries of Germany and France and to lesser extent Canada and UK.

[Ying Huang:]

Thank you very much.

[Operator:]

Thank you. And our next question comes from the line of Salveen Richter with Goldman Sachs. Your line is open.

[Kerry Tang:]

Hi, this is actually Kerry on the line for Salveen. Congrats on the congrats on the progress and thanks for taking my question. So, I have two, first I was wondering if you could clarify the timeline around the CONTROL study. Do you expect to top line data and would we see the full data including any read on NASH activity coming in a potential medical meeting next year. And second, what is your view on the competitive landscape given lease data Gilead’s drug, do you see the potential for combination therapy using ASK1 inhibitor that makes our agonist to be synergistic. Thank you.

[Rachel McMinn:]

Hi, it’s Rachel. I’ll take those questions. So for CONTROL at this point we are not committing to anything beyond 2017 at this point. We would expect given the study that the high interest from investors, the results would be top line. Keep in mind that this is a 16 week trial, but there is also a washout period for any patients who are coming into the study on statins. And you obviously need time to clean up the data for database blocks. So as you are formulating your timeline, you can kind of work through that math on your own at this point. In terms of the competitive landscape as Mark said, it’s very, very early days. Most products out there who don’t have Phase II data and some of the ones that do have either failed their Phase II study and are using secondary endpoint or an endpoint that wasn’t even successful during subset analysis or are based on very small uncontrolled study. So, I think even when we look at the companies that have very few results, our perspective is that there could be substantial clinical rest that that some of our competitors are taking on as they move into Phase III. So just being in Phase III doesn’t mean that they are going to have a successful outcome. In terms of combination, as we have said before we remain intensely interested in this, but given the early stake need for all of the overall development pipeline, it’s difficult to figure out what makes the most sense. So, I think we view OCA as a potential backbone of therapy, its low dose, once-a-day limited interaction for - drug interaction, it’s a marketed product at this point in a liver disease, that’s different but certainly already approved, has an extensive efficacy and safety database. So we think that this is valuable options down the line for combination therapy, but not going to provide any more specific at this point.

[Kerry Tang:]

Thank you.

[Operator:]

Thank you. And our next question comes from the line of Jim Birchenough with Wells Fargo Securities. Your line is open.

[James Birchenough:]

Hi, guys. Thanks for taking the question. So few follow-ups. So just I’m trying to understand how reasonable your target enrollment is, and what is required to the new sites you are enrolling. So it’s the new sites you enroll or the early phase of the prior site can hit your targets, or do you really need existing sites to ramp up enrollment as well. And why don’t you have a better sense for us whether you are going to be able to hit that enrollment target. And then I have got a follow-up.

[Mark Pruzanski:]

Yes. Thanks Jim. As I said in my prepared remarks and we remain committed to meeting other timelines. And we are exploring a number of options not just the new site but others. And frankly, at this point in time, we are not going to file additional details on what options we are pursuing.

[Rachel McMinn:]

And Jim. Yes, sorry we are not trying to be clear, but just given the competitive nature of NASH and the number of companies that are trying to learn from everything that we are doing. We would just prefer to keep those types of comments to ourselves as planned.

[James Birchenough:]

So may be a commercial question. Trying to get a sense of how much of a bottleneck the prior off requirements maybe creating, can you give us some sense of how many commercial patients we have on drug right now versus patients coming into Interconnect and what is the lag between prescription and getting the drug to patients currently. I want to understand that this is really more of an administrative barrier as opposed to owners requirement that patients are having trouble? Thanks.

[Richard Kim:]

Sure, Jim it’s a great question. So as far as the process is concerned right now, I think what is going on is one thing, a lot of our customers getting used to from going from prescribing generic product, which had no process to a specialized pharmaceutical products that have authorization process to. So as I think there is definitely bit of adjustments there as we talked about in the prepared remarks are the enrollment into Interconnect is robust and it’s meaningfully higher than what we are seeing through the IMS trends right now. So what would I say right now is, we are sort of in this temporary sort of adjustment period right now. A lot of this is really typical a new product specialty launch in an area like this, but what we do see is, once we actually have patients, the cart patient criteria and patients starting that right from the beginning, it should be much more streamline going forward. I would like to say that we are about halfway through with 145 million lives covered thus far. So we have more to do, but I think we have made really good progress there and we do expect things over time to improve.

[Rachel McMinn:]

And then Jim, as I think you had asked a question on like what is the time from when a prescription is written to - when is actually set so Richard maybe you can.

[Richard Kim:]

Yes, it’s right now, it’s probably somewhere around four weeks give or take a little bit, some are taking a little bit longer as we are experiencing. And some that actually start with the prioritization process are starting to go through quicker than that as well. So we are still in the sort of temporary flex period. And I think as little more time goes forward we will have more clear metrics around that as well.

[Operator:]

Thank you. And our next question comes from the line of Ian Somaiya with BMO Capital Markets. Your line is open.

[Ian Somaiya:]

Thanks. I was just connected for short period of times, hopefully this is not a repeat. Two questions, one just referring to one of your slides, there is a description of the type patients that are coming on to therapy. Obviously, those are been affected the inclusion types and then there was other bucket. I was hoping to describe the other bucket and how we should think about that patient population over time. Second question is just relates to obviously bit of a lands out there that we are seeing some companies that deep process and the question was specific to your BD strategy. How does that influence your business development strategy both from a standpoint of developing proprietary combination, procuring proprietary drug that you could use as a combination. And then, does it change your commitment to NASH from a licensing BD standpoint, maybe refocus is to other areas where you could your sales force?

[Mark Pruzanski:]

Great. I’ll take the first question. As far as the patients coming in, we believe that majority of them are very aligned to the POISE population. What we are seeing right now is that somewhere around 10-ish percent who are in tolerance and the other bucket is the a little bit of a mix up both in tolerance also patients with alk phos below 1.67. So that ranges somewhere around 10% to 15% of our patients. So from the initial base line alk phos so, but the vast majority of our patient are definitely aligned to POISE criteria.

[Rachel McMinn:]

In terms of our business development strategy I think we are still a relatively young company, we are not going to be able to compete for assets to the extent that prices are in NASH. But I would also underscore, again this idea of just a substantial clinical risk some of the price is being paid. We understand this in the NASH and certainly we agree with Big Pharma and other companies that are spending a amount of money of what that actually means for the ultimate potential size of the NASH opportunities, but there is a lot of risk in there. So that would not be a good use of our capital structure. So, I think in terms of how we move forward with compound as I mentioned, I think its early days, we have a lead compound with a very strong profile with the strongest profile out there as Mark said working on both fibrosis as well as other aspect of NASH. So, we think that this is a unique asset and as the pipeline of compounds is actually move through we do see an opportunity to collaborate and use OCA as a backbone in one or perhaps multiple therapies. I think it’s too early days to think about how could we view the outside of NASH, but certainly something that we would be considering.

[Operator:]

Thank you. And our next question comes from the line of Alan Carr with Needham & Company. Your line is open.

[Danielle Brill:]

Hi, this is Danielle in for Alan. Thanks for taking my question. I was wondering if you could comment more on why you think we are generating enrollment over than expected. And then maybe on development plans for 767 light indication that you are thinking about and how it’s different from Ocaliva?

[Richard Kim:]

Yes. Thanks for the question. As I mentioned a few minutes ago this is the first Phase 3 NASH outcomes trial. It is a very, very maker major undertaking - it’s a global study, we are working with number of investigators who have limited experience working in NASH. And at the end of the day it requires serial biopsies. And as I mentioned on our last earnings call, no matter how good you are at assessing a patient on a pre-spending basis, at the end of the you are only going to qualify for the study if you meet very rigorous histologic inclusion criteria, and that results in a expected relatively screen fail rate. So there are number of different factors that drive the rates of enrollment in a study like this. And of course we are learning as we go, and as I mentioned we have identified a number of different opportunities to improve productivity in an enrollment. And we remain committed to meeting our guidance for our timelines to getting the increment else as cohort enrolled.

[Rachel McMinn:]

On 767 at this point the specific one is not been yet complete, so I think we are waiting for that data as a help guide. Our decision on indication that as Mark has said before pre-clinically it’s a very strongly effective compound relative to OCA. So there is a lot of potential opportunities, we could take this forward in PBC and NASH and other indications as well. So I think the one that better understand a profile from Phase I and use our two guide our decision.

[Danielle Brill:]

Okay. Thank you.

[Operator:]

Our next question comes from the line of Jay Olson with Oppenheimer. Your line is open.

[Jay Olson:]

Hi, thank you for taking the question. I’m curious about and anything that you think we should be paying attention to the could potentially shed light on either on Intercept or your competitors either in NASH or PBC? Thank you.

[Richard Kim:]

Yes, thanks for the question. I don’t know you if you came through the prepared remarks given this technical issues, but we are very excited for this meeting, it will be the first that we tend to has a commercial company and it hopefully will be very productive meeting. I do want to highlight one aspect that will be presented by one of our POISE investigators and this is on additional data non-invasive fibrosis assessments by Transient Elastography or FibroScan and is such that be the Phase III population we studied and also a composite biomarker score called [Indiscernible]. And this actually extends our understanding of what potentially might be going on, there is a hint of other signal, despite the fact that there is relatively few patient studied in POISE and also with a relatively short period of time. So that’s one thing that I think I want to highlight before the meeting and there are number of other abstracts that we are going to be presenting as well.

[Rachel McMinn:]

Yes and just from an external perspective to Intercept. a number of as I’m sure you are aware FXR, competitive FXR early stage data and I guess our perspective is that FXR agonists are create equally, they will look across the abstracts and see a massive multiple orders of magnitude just in dosing, overall profile. And our position is that it’s going to be very difficult to base any conclusions on Phase I data. So I think our view is that this will be interesting to see some initial profile, but we are really going to need to see Phase II data from some of these other FXR agonists that really prove that if they don’t have certain side effects and a big question is whether or not they have any efficacy. So I think we are hoping not to learn that at this meeting, but perhaps a year or two from now.

[Jay Olson:]

Great. Thank you.

[Operator:]

Thank you. And our next question comes from the line of Joseph Schwartz of Leerink. Your line is open.

[Brett Larson:]

Good morning, everyone. This is Brett Larson in for Joe. First on PBC curious on launch so far, having reached the vast majority of your target prescribers. Are you seeing greater breath or depth of adaption or in other words do you find that your high volume treaters have transitioned all their patients, or is it more of an important math of low volume treater adoption. And also on PBC, curious you mentioned a couple of times our coverage is generally consistent with the label, but curious if you can give probably a little more color on when the coverage does deviate from the label indication whether those inconstancies?

[Mark Pruzanski:]

Great, hey, great question. Thanks. So as far as treater base is concerned I think we are still very early on as far as the number of treaters that come on board. What we have stated in the past is this is a disease where we didn’t expect a lot of patients to rush in, at the beginning a low sort of steady buildup. Patients are coming in for their regulated schedules. So we have seen a higher prescription rate from our lead target, but we are also seeing use in other practice as well. So it’s still a little bit early to say, but we definitely are adding new prescribers on a weekly basis both in our lead target and our overall target group and even a few outside of that group as well. As far as the coverage is concerned, what we can say so far is, we have seen no criteria at that semester come from prior authorization that is more restrictive than what we have seen through POISE at this stage. So right now we would say we are very consistent with what we have seen thus far, but at this point nothing in this field has changed, we haven’t seen more restrictive criteria at this stage. A lot of it comes down to the department of do you need just a checkmark on alk phos, do you need a specific lab value, but as far as the alignment to data we haven’t seen anything more restrictive than POISE at this stage.

[Brett Larson:]

Okay. Great. That’s helpful. And last question are you aware of any factors of confirm comes to describe a call it a off label for NASH so far. And is it your sense that there are any payers that have not been in the place controls to prevent what is happening?

[Mark Pruzanski:]

Yes. So, right now through our Interconnect patient services, we actually do not charge any patient who are not PBC. So, our visibility is that really not that great, so really haven’t referred that much of it through [indiscernible] and once again for Interconnect, we really don’t have much of that visibility. So not a lot I can sort of read on at this stage.

[Brett Larson:]

Okay. Great. Thank you very much.

[Operator:]

Thank you. Our next question comes from the line of Joel Beatty with Citi. Your line is open.

[Joel Beatty:]

Hi. Good morning. And thanks for taking my question. For the optimal rates that you have been seeing have you noticed any difference between patients there have been intolerant to or so or compared with to patients that had an adequate response?

[Mark Pruzanski:]

Joel, it’s a great question. So, what I would say is when you goes through the criteria it’s usually easier to deploy to actually check the box when it borrowing. When it comes to patients with an adequate response, as I mentioned previously some of the variations is whether or not be actually require specific lab value or whether or not you are just checking that it is an adequate or an elevated alk phos. So, we haven’t heard meaningful differences but what I can say is when you are bringing some through working intolerant there is generally less deals that have to be build out those patient.

[Joel Beatty:]

Thank you.

[Operator:]

Our next question comes from the line of Jeff Hung with UBS. Your line is open.

[Jeffrey Hung:]

Thanks for taking the question. Given the additional time on the market, can you talk about healthy average number interaction needed by your sales force or physician prescribed Ocalia has changed overtime?

[Richard Kim:]

Sure by the way I got a fair now being the commercial person, we do call Ocaliva for everyone on the call. But I do like Ocaliva some time, but as far as the number of interaction it really does different by customer. As we have said different people are on different journeys as far as their awareness for PBC. So it’s really hard to say exactly how many interactions. All I can say is as we our targeting strategy on the lead target and our overall forecasted target group we believe that with the right one we are seeing the right people. But it’s really hard to say as I think people are in different press journey right now.

[Jeffrey Hung:]

Okay. And then on the time for script again through previously you mentioned if I heard correctly now close to four weeks, but given the change due to formulary coverage that apply that for a period of time in the last two months did they gone before four weeks?

[Richard Kim:]

Yes, I think what we are seeing is in general when a patient starts through the process almost fresh under it and there is new publish criteria, its gong pretty good maybe I can even say a little bit less than four weeks. But now we also have some these patient for - who were beginning through one process in the medical exception and now going through a PA which will actually probably going over for four weeks. So, we are a little bit fluctuate right now. Over time when we have more publish criteria, PA criteria. We think time well improve, right now we are that through

[Jeffrey Hung:]

Okay. Thanks.

[Operator:]

Our next question comes from the line of Brian Skorney of Robert W. Baird. Your line is open.

[Unidentified Analyst:]

Hi, this is [Meena] (Ph), on for Brian. Just two questions. One is you mentioned that most patients are starting on the 5mg dose and then during the titration up, do you have a sense what percentage are starting actually on the higher dose and why physicians might be achieving to the start their without doing titration? And then the second question is I know you said that you, if little early to talk about compliance and sense but have you heard anything about discontinuations, anything associated with [Indiscernible] and do you expect ultimately the discontinuation rates will kind of settle around what you saw in the POISE study or are you expecting to see something different? That’s all.

[Mark Pruzanski:]

Great. Thanks for the questions, Meena. So, so right now we can see [Indiscernible] is around 95% of patients start on the 5 milligram dose. So obviously, about sorry above 5% start on the 10 milligram dose. So clearly our message to everyone is to start up 5 milligrams, that’s what is in label. there is no real I think my intuition is some people know that 10 milligrams is where people want to get to, but we don’t have the reasons why a might be initiating at 10 milligrams. As far as the compliance rates are concerned, as I mentioned and as you said it is kind of early to see. It’s hard to say [indiscernible] data and what is happens in a clinical study, so we can say thus far is we have not or I have not heard any. We will have discontinuation that’s given, but I haven’t heard anything in consistent with how we view the product profile, I also will say we are getting step base where more patients will be dosed titrated so we are going to be learn little bit more with you next few months as well.

[Operator:]

Thank you. And our next question comes from the line of Liisa Bayko with JMP Securities. Your line is open.

[Liisas Bayko:]

Actually my questions have answered. Thank you.

[Operator:]

Thank you. And our next question comes from the line of Jim Molloy with Laidlaw. Your line is open.

[Unidentified Analyst:]

Hi, this is actually Frank on for Jim. Thanks for taking the question. Most were also answered but just a couple in terms of the timeline here. The REGENERATE it’s kind of fly out but do we know when we could expect the interim data for that?

[Richard Kim:]

Yes, what we said before is to expect [Indiscernible] data in 2019.

[Unidentified Analyst:]

Okay. Thank you. And then for PSC is this a first or second half 2017 that the data should be coming out.

[Richard Kim:]

It for now we just think 2017. But the study is fully enrolled, we announced that in September.

[Rachel McMinn:]

And just as a reminder is this six months dosing period and you need time to lock the data et cetera. So you definitely see it next year.

[Unidentified Analyst:]

Okay, great. And then just lastly on in terms of off label, I know the visibility is very high right now as you guys just mentioned, but when could we expect this to get a little better and can you guys see this as getting better anytime soon?

[Rachel McMinn:]

So I think we are a little bit around the table where obviously our organization is not promoting Ocaliva off label. As Richard mentioned to you our system is even design to specifically patients with diagnosis of PBC. So to the extent that physicians choose to do that off label that would not go through our systems in anyway shaper form. So we are not going to be able to provide you with any type of visibility we are not looking for it would not be a appropriate or compliant.

[Unidentified Analyst:]

That makes sense. All right. Thank you very much.

[Operator:]

Thank you. And we have a follow up from the line of Jim Birchenough from Wells Fargo Securities. Your line is open.

[James Birchenough:]

Hi, guys. I was just wondering if there is any further detail that you could provide on screen failures either in terms of quantitatively what that rate is. Or just more qualitatively what is contributing to the screen failures. Is there any gearing between centers and is there anything in terms of the actual procedure of obtaining the biopsy that could be improve upon. I’m just trying to get set the back of variable that might be some improvement?

[Mark Pruzanski:]

Yes, Jim. I’m not going to again comparative reasons not going to excuse me, disclose on exactly what the screen sale rate is, but as the price to say, as I said a few minutes ago it is fairly high not unexpectedly. And to the qualitatively side of your question, yeah there are learnings that we can take from screen sales there are better and worse places ways conducted on biopsies and not to get same to the details of how that works. But we are looking again for opportunities to improve all metrics in the study and improving the screen coverage rate is just one that could result in perfect moment.

[Operator:]

Thank you. And our next question comes from the line of Joseph Schwartz of Leerink. Your line is open.

[Joseph Schwartz:]

Hi everyone. Quick follow-up question. Curious what percentage of new patient starts currently or go have gone through they have gone through the interconnect portal as appose to not?

[Mark Pruzanski:]

Yes. Just a quick question. So, through the third quarter the vast the majority of patients went through Interconnect. So, it’s a new patient services, help physician get their patient to their systems. We have some learnings with that as well as we continue to increase our operations but the vast majority of our patients in that through the third quarter of went bring from that.

[Joseph Schwartz:]

And does that trending upward or downward or staying flat at this point are you seeing those came from the mentioned are there was leading to and increasing decreasing or consistent rate at this point relative to the few months that you have been available?

[Richard Kim:]

Well, just one of the things we have done very recently in October our commercial co-pay car as a reminder for commercially follow up by patient they can actually have zero dollar co-pay, we have just recently expand with that service to be available through our specialty network directly and awful has been for each next-. So, that will likely impact some of the enrollment numbers into that one forward.

[Joseph Schwartz:]

That’s really helpful. And last part of that question. Can you remind us of the criteria or criteria for qualifying for the coped system program?

[Richard Kim:]

Yes. I mean they basically will go through I mean they have to be commercially insured the patient. And as long as they are qualified we can verify their insurance in general and commercial patients will get zero dollar co-pay, but once going only for the commercial channel at this stage.

[Joseph Schwartz:]

Right. And there is any sort of the like your cap earning income or verification process in that way that would precludes something from receiving that coped systems?

[Richard Kim:]

At this stage, no.

[Joseph Schwartz:]

Okay. Great. Thank you.

[Operator:]

Thank you.

[Rachel McMinn:]

I think that was our last question. We want to thank everybody for dialing in this morning. And we’ll be available for follow-up questions if you have them. Thanks very much.

[Operator:]

Ladies and gentlemen thank you for participating in today’s conference. This does conclude the program. And you may all disconnect. Everyone have a wonderful day.